Economy

Development of the Slovak economy has been influenced to a significant measure by the transformation from a centrally managed economy to a free market system. Building the system of an open economy and increasing exports also eased the entry of Slovakia to the European Union on 1 May 2004, which ensured an increase in international cooperation and Slovakia’s competitiveness on international markets and increased the amount of foreign investments, predominately in the sectors of industrial production, services and construction. Slovakia is an open, pro-export economy with close ties mainly to the German market. The export character of the economy caused, however, the financial crisis of 2008 to affect Slovakia more than other countries. Growth of the economy slowed, the demand of trading partners for industrial products and labour forces fell and the availability of credits for business was made significantly more difficult. The hard impact of the crisis on the Slovak economy was partially reduced by introduction of the euro currency on 1 January 2009, which opened the market to additional investors, ensured cheaper capital for the fiscal needs of the government and brought currency stability. From the first half of 2010 Slovak export continually grew and in the following years returned to its pre-crisis level.

Thanks to the amount of foreign investments and high exports, the Slovak economy currently ranks among the fastest growing economies in Europe. On the basis of GDP per capita and the purchasing power per citizen Slovakia is after Slovenia and the Czech Republic the third strongest economy of the former socialist states. GDP growth on average is 3.0% annually.

In the coming years further growth of investments into the automobile industry (the arrival of the car-maker Jaguar Land Rover) and energy is expected, and thus also an increasing in the number of jobs and a drop in unemployment, which at present is already at a historical minimum (9.5%). The average monthly wage in 2016 achieved in the economy of Slovakia 889 euro. The highest level of average monthly wage was in the IT sector (1,672 euro) and finance and insurance (1,563 euro).

Agriculture

Agricultural production at present has become less important – the number of employees in this sector represents roughly 3%.

Plant production makes up roughly 40% of agricultural production in Slovakia. The total measure of agricultural land is 2,389,616 ha, 59.1% of which is arable land and 35.9% is permanently grassy.  There are 5 basic production areas in Slovakia based on the quality of the soil and meteorological conditions: maize (cca 37% of the area of Slovakia), which includes land with prerequisites for growing maize, corn, sugar beets, thermophilic vegetables  and fruits or vineyards. This area covers the territory of the fertile lowlands in the south and south-east of Slovakia (the Danubian Lowland and the Eastern Slovakia Lowland). Another area is the sugar-beet area (13% of the area of Slovakia), which includes territory up to 350 m a. s. l. and its typical crop is sugar beets. This area is represented by the Danubian Lowland. The potato-growing area (15% of the area of Slovakia) is typical for higher and cooler locations up to 600 m a. s. l., for example, in the Hornád and Poprad Basins. The potato-oats area, that is the entire Záhorská Lowland and marginal areas of the Eastern Slovakia Lowland, takes up 9.5% of the area of Slovakia and is suitable mainly for cultivating vegetables. The mountain region (24.6% of the area of Slovakia), that is the territories of Kysuce, Orava, the Upper Hron or the Slovak Ore Mountains, has the weakest climatic and soil conditions for vegetable production and it is thus substituted with animal husbandry.

A characteristic component of Slovak agriculture is wine production, concentrated in wine-growing areas, which together total roughly 12,000 ha of soil. The most extensive area is the Little Carpathian region in the west of the country; the warmest is south Slovakia, and the most diverse is the Nitra region, and an additional one-sixth of the total area made up of central Slovakia, eastern Slovakia  and the most famous wine-growing region – the Tokaj region – located in the south-eastern part of the country. Total annual wine production is about 400,000 hl of wine and the annual consumption per capita in Slovakia is 12.5 l.

Animal production represents roughly 60% of agricultural production. The breeding of stock animals is concentrated on the margins, the border areas of central and northern Slovakia – in the Danubian Lowland, the Košice Basin and the Liptov and Orava regions. The breeding of pigs is concentrated in areas with higher maize production, that is the areas of the Eastern Slovakia Lowland, the Košice Basin and the South Slovakia Basin. The raising of sheep is less demanding on soil fertility; therefore, it occurs in the Zvolen Basin, the Krupina Plain, the Gemer, Upper Hron, Liptov and Orava regions. At present animal husbandry is undergoing a serious crisis. It is being afflicted by a lack of support from public sources and unfavourable price developments, which lag behind the level of production costs. The production of pork, chicken, eggs and last year even milk is loss-making for farmers, as a consequence of which the position of agricultural animals is gradually being reduced.

The boom in Slovakia, in contrast, is reviving ecological agriculture, which is currently the most dynamically developing component of the agricultural sector. The reason for growth is on one hand subsidies from the European Union in the field of organic foods, but also increased demand of consumers for quality and healthy foodstuffs. In the last two years the number of organic farms and the area they cover has grown several fold – at present there are more than 220 of them on an area of more than 94-thousand ha.

Industry

Industry in Slovakia over the past 20 years has been characterized by a changeover from heavy industry, especially the arms and metallurgical industries, to the production of automobiles or consumer electronics. Instead of countries to the east, companies began to export to the markets of the European Union. The heaviest areas of industry are the automobile industry, the electronics industry, construction, pharmaceuticals and the food industry.

The machining industry is a key branch of the Slovak economy with a strong tradition. It employs more than 30% of residents of productive age and carries out 98% of Slovak exports. The massive boom in industry was supported especially by the founding of industrial parks – associations of companies with their own infrastructure. Transport engineering is the strongest area of industrial production, behind which follows the manufacture of computers, electronics and optics and the production of metals and metal constructions.

The boom in the automobile industry in Slovakia is linked to the early post-revolution period, when the German car-maker Volkswagen decided to build a plant for the production of automobiles near Bratislava. With the arrival of another two car-makers – PSA Peugeot Citroën (Trnava) and KIA Motors (Žilina) – and thanks to the presence of global supplier businesses (for example, Valeo, Faurecia, Lear, Magneti Marelli, GetragFord) Slovakia became in the following years one of the leading makers of automobiles in Central and Eastern Europe. Year 2016 was a record-setting year in the automobile industry – plants in Slovakia collectively produced more than 1,040,000 automobiles. Slovakia at the same time leads the world table in the number of automobiles produced per capita. In 2016 this was 191 vehicles per thousand citizens. The car-maker Jaguar Land Rover, which from 2018 will create 6000 – 8000 new jobs in the Nitra Region, is now coming to Slovakia.

Among the important activities of development of the auto industry we can also consider the first initiatives in the development of e-mobility in Slovakia. The building of electricity infrastructure for electric automobiles in Slovakia was begun by the company Východoslovenská energetika, a member of the RWE group, and Západoslovenská energetika, a member of the E.On group.

The electronics industry since the year 2000 has grown the fastest among all the branches of industrial production, and it too has an important and irreplaceable position in Slovak industry. Former centres of electronics production, such as Nižná na Orave, Stropkov or Bratislava, have lost their major standing and been replaced by industrial parks with contributions of foreign investors and automated production. New electronics centres have originated not only in western Slovakia – in Galanta (Samsung Electronics Slovakia), Nitra (Foxconn Slovakia, SE Bordnetze) and Trenčín (AU Optronics, VMA Slovakia) – but also in eastern Slovakia (Kechnec – Magneti Marelli Electronic Systems, IEE Sensing Slovakia; Michalovce – BSH Drives and Pumps, Yazaki Wiring Technologies Slovakia).

The ICT sector represents an important source of GDP growth in the country. Slovakia offers foreign investors many advantages in the information and communications services sector: relatively low wage costs for a qualified labour force, a high level of foreign language skills and excellent access to university education in ICT branches for future employees. Among the largest employers in the IT sector in Slovakia are T-Systems, IBM International Service Centre, AT&T Global Network Services, Accenture and ESET.

The pharmaceutical industry in Slovakia is represented, for example, by the companies ZENTIVA (Hlohovec), BIOVETA (Nitra), IMUNA (Šarišské Michaľany) or BIOTIKA (Slovenská Ľupča).

Among the largest representatives of the food industry are the companies Kraft Foods Slovakia, Palma Tumys, Rajo (Bratislava), Nestlé (Prievidza), Tauris (Rimavská Sobota), or the Slovenské cukrovary (Slovak sugar producer, in Sereď).